An established, market-leading food processing and packaging business (the “Company”) was seeking equipment lease financing to pursue capital expenditure projects to: (i) expand its manufacturing capacity and (ii) diversify revenue across new products. In particular, the Company sought financing for ongoing capital expenditure projects to support the expansion of several major customer contracts.
The Company produces a broad range of protein products which they sell to major retail and restaurant customers across the nation. Atalaya was shown the opportunity by equipment financing company Nexseer Capital. Nexseer has extensive experience in the food processing space and had established a direct relationship with the company to fulfill its equipment financing needs. The Company operates in a low-margin industry and is exposed to commodity price swings. Still - Atalaya and Nexseer were able to get comfortable with the Company due to its scale, ample liquidity, and market leadership.
Atalaya is providing ~$1.2 million of equipment financing alongside additional amounts financed by Nexseer, for the purchase of new equipment. In addition to this initial funding, Atalaya plans to fund up to $4 million (total) via several other projects and equipment purchases depending on the growth of the business over the next twelve months.
Atalaya was encouraged by the Company’s financial strength, market-leading position, and entrenched customer relationships. Furthermore, the equipment has substantial in-place value as it is revenue generating for the Company to support its sizable large customer relationships.
By financing the equipment alongside Nexseer, Atalaya is allowing the Company to expand production and pursue new product lines. While the funding schedule was relatively complex and spanned multiple projects and schedules, Atalaya moved quickly to get up to speed and comfortable with the transaction. Additionally, Atalaya was able to be an efficient and flexible partner for Nexseer and the Company by stepping into pre-negotiated documents.
The equipment is essential for the Company’s manufacturing and enables the production of higher-margin products. As a result, the financing is expected to not only generate revenue growth, but expand EBITDA margins as well, enabling the Company to continue to invest in growth.